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Civil · Reportable judgment

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. vs State of Maharashtra & Ors.

Court
Supreme Court of India
Date
4 June 2025
Case No.
Civil Appeal No. 7372 of 2025
Result
Allowed
Bench
Sanjay Karol, Prashant Kumar Mishra
Citation
[2025] 7 S.C.R. 427 : 2025 INSC 801
Acts & Sections
Constitution Industrial Dispute (Maharashtra) Rules, 1957 Industrial Disputes Act, 1947
Supreme Court Reports [2025] 7 S.C.R. 427 : 2025 INSC 801
Issue for consideration
(i) Whether letter dated 25.09.2019 sent by the Deputy Secretary of State Government can be construed to be an order - Connectedly, whether the appellants would be entitled to the relief of deemed closure, as on 27.10.2019 by virtue of the deeming fiction present in s. 25-O(3) of the Industrial Disputes Act, 1947; (ii) What would be the meaning of the phrase ‘appropriate Government’ and whether in the facts of this case, it was the appropriate Government acting in the matter of the closure - if not what is the effect in law, thereof.
Headnote

Industrial Disputes Act, 1947 – s.25-O(1), 25-O(3) – Industrial Dispute (Maharashtra) Rules, 1957 – r.82-B(1) – Appellant-HSML was engaged in biscuit manufacturing exclusively for BIL under Job Work Agreements (JWA) – JWA was terminated by BIL – Resultantly, applications for closure of business were made to the competent authorities on 26.08.2019 – By a letter dated 25.09.2019 sent by Dy. Secretary, State Government informed HSML that they failed to disclose their efforts to prevent closure, nor had they given cogent reasons for closure and were, therefore, asked to resubmit their application – By way of reply dated 10.10.2019, HSML furnished the particulars as asked for – It is to be noted that the 60-day period provided for u/s. 25-O(3) of the Act ran out on 27.10.2019 – On 04.11.2019, HSML was once again asked to resubmit their application as authorities found response of HSML lacking – HSML in their response contended that by virtue of s.25-O(3), the permission of closure is deemed to have been granted – The Deputy Commissioner sent to HSML two letters, dated 20.11.2019 and 22.11.2019 asking them to be present for a meeting on 26.11.2019, and conveying to them that the State Government was yet to grant permission for closure – Letters dated 04.11.2019, 20.11.2019 and 22.11.2019 were challenged before High Court – High Court, by the impugned judgment, dismissed the writ petitions – Correctness:

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Held: There is nothing on record to show that the Dy. Secretary was duly authorised to conduct communication and/or accept or reject applications for closure made by industrial units – The concerned authority in that regard is only the Minister – There is no express authority resting with the Deputy Secretary – Reliance cannot be placed on internal noting to establish compliance with procedure – s.25-O specifically provides “by order and for reasons to be recorded in writing,” and so, reasons are a statutory necessity – When the minister is the sole authority, endorsement of a view taken by an undisclosed officer of the Ministry cannot be said to be an ‘application of mind’ by the competent authority – The decision had to be top down and not otherwise – The necessary conclusion is that the letter dated 25.09.2019 addressed by the Deputy Secretary to HSML cannot be constituted to be an order since such order to resubmit the application was without any authority since it was not the appropriate Government acting in that regard and not an order rejecting or accepting the application – The appropriate Government failed to make and communicate any order on the application for closure – The deemed closure would, therefore, come into effect – In that view of the matter, application dated 28.08.2019 was complete in all respects, and the 60-day period for the deemed closure to take effect would be calculable from said date – Also, the Deputy Secretary was not the appropriate Government who could have asked HSML to revise and resubmit the application for closure – That authority is only vested with the Minister concerned. [Paras 15, 16, 17, 18, 22] Industrial Disputes Act, 1947 – s.25-O – Scope of: Held: i) The right to close the business is subject to the interest of the general public; ii) any application seeking permission for closure must disclose adequate and genuine reasons which the authority has to have regard for; iii) in certain cases, however, even if the reasons are genuine and adequate, it does not mean that permission to close ought to be granted; iv) if it is found that the reasons are generally adequate, and despite that the appropriate Government decides for refusal of permission of foreclosure, then the interest of the general public involved in that particular case must be “compelling” and “overriding”; v) financial difficulty on its own cannot constitute the reason for shutting down the business – An employer must demonstrate exceptional circumstances or an impossibility of running the business. [Para 13] Constitution of India – Art.19(1)(g) – Freedom of trade, profession, occupation and business – Right to shut down business – Elucidated:

Held: If there exists the freedom to set up and run a trade/business as one sees fit, necessarily, there has to be a set of rights vesting with the proprietor/owner to take decisions as may be in his best interest – At the same time, law does not permit such owner or proprietor to take any and all decisions without having considered and accounted for the impact that it shall have on the employees or workers that are part of this establishment – This is evidenced by the s. 25-O of the Industrial Disputes Act, 1947 providing for a detailed procedure to be followed when a person wishes to ‘shut shop’, but concomitant providing that if the concerned Government does not take action with reasonable expediency, the business owner should not be saddled with the costs and responsibilities of running the business indefinitely, till such time the authority arrives at a proper and just decision – The sum and substance are that Art. 19(1)(g) includes the right to shut down a business but is, of course, subject to reasonable restrictions. [Para 10]

Keywords: Closure of business · Closing down an undertaking · Permission of closure · Closure application · Job work agreement · Efforts to prevent closure · Not given cogent reasons for closure · Functus officio · Workers’ unions · Form XXIV-C prescribed u/r.82-B(1) of the Industrial Dispute (Maharashtra) Rules, 1957 · Form XXIV-B prescribed u/r.82-B(1) of the Industrial Dispute (Maharashtra) Rules, 1957 · Relief of deemed closure · Deeming fiction in s.25-O(3) of Industrial Disputes Act, 1947

As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.

Full Judgment Text

Judgment Sanjay Karol, J. This judgment, for clarity and ease of reference, is divided as follows: TABLE OF CONTENTS* THE APPEALS ........................................................................... BACKGROUND TO THE WRIT PETITIONS .............................. THE IMPUGNED JUDGMENT ................................................... 13 SUBMISSIONS OF THE PARTIES ............................................. 17 A. Appellants ......................................................................... 17 B. Respondents ...............................................................
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